Jindal Stainless Ltd. (JIST.BO): Major beneficiary of rising domestic consumption; Capacity expansion to boost global leadership; Initiate at Buy

Research evidence excerpt

Jindal Stainless Ltd. (JIST.BO): Major beneficiary of rising domestic consumption; Capacity expansion to boost global leadership; Initiate at Buy

Goldman Sachs Jindal Stainless Ltd. (JIST.BO)

next decade (per Crisil), we estimate India’s consumption to grow by ~8% CAGR

(FY24-35E). Additionally, India’s per capita consumption of stainless steel is at 3.3kg

(2024), lower than the global average of 5.5kg. In our view, per capita consumption

has more headroom to go up, as the usage of stainless steel across applications

grows with the increase in GDP growth providing a supportive backdrop for

domestic capacity additions over the medium term. In order to support the

incremental demand, the melt shop production needs to increase by 7mtpa

compared to FY25, in our view.

n What are the future avenues for consumption? The growth in stainless steel

demand is expected to be led by the ABC (architecture/building/construction) and

ART (autos/rail/transport) segments where stainless steel is being increasingly used.

These segments primarily use 300 and 400 series, which are the focus areas of JSL.

Furthermore, we have identified 10 specific emerging applications of stainless steel

that would require an additional 1.7-3.2mt of stainless steel per annum by FY30E.

n How is the carbon steel industry different from stainless steel? Unlike carbon

steel, which is primarily a volume driven industry accounting for ~80% of global steel

demand, stainless steel is a value added market with higher pricing and greater

concentration. Additionally, stainless steel benefits from higher recycling content

(60-80% vs 10-15% for carbon steel). Hence, there are a very few players in the

world that produce both carbon and stainless steel.

n Why P/E methodology is appropriate for JSL.